Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
Silver prices in January 2015 rose 9.8%. That makes it the best month for the price of silver since June 2014, when prices climbed 11.4%.
Yesterday (Thursday), spot silver prices closed at $17.22 an ounce. Silver in February had remained relatively flat, down a mere $0.005, until prices fell another $0.52 by 3:30 p.m.
The January 2015 silver price rally is a welcome change from December 2014, when prices fell 5.2%. Months of declining silver prices before 2015 drove the white metal down to four-year lows.
While it's nice to see silver prices rising in 2015, our 2015 silver price chart shows volatility is a big issue. Silver rose about 17% from the start of the year until Jan. 22, then dropped 5.5% in one week.
Silver volatility is going to be a big issue this year. While always subject to violent price swings, silver is going to be operating in a stranger environment than usual…
Why Volatile Silver Prices in January 2015 Will Continue
Europe's economic issues give silver reasons to both rise and fall in 2015. The result will be plenty of short-term volatility.
The Eurozone's problems with deflation and slowing growth will bolster concerns over the global economy. That typically supports investment in gold and silver and hard assets.
But the Eurozone could also provide a headwind. You see, the Eurozone announced at the end of last month that it is embarking on a Eurozone quantitative easing program.
In Eurozone QE, the European Central Bank will buy 60 billion euros ($67.9 billion) a month in bonds. Of that, 50 billion euros ($56.6 billion) will be government bonds from member countries.
While a euro devaluation would be good for silver as investors ditch the euro, it will also strengthen the U.S. dollar. A stronger dollar makes silver cheaper (in terms of dollars.)
Longer term, though, the dollar won't be able to maintain this strength. That's bullish for silver – and another reason we look for price dips as buying opportunities.
Another short-term headwind comes from the silver futures market…
Mr Bach, The rampant volatility in the silver market has given me pause to rethink part of my strategy to weather the impending financial chaos. The world economy in my humble opinion is the old "smoke & mirrors" routine. With the major world powers printing fiat currency to service their debts and deficit spending at record levels, how much longer will the "house of cards" stand? How much of this newly created fiat currency is being invested in precious metals? Please pardon my rhetorical questions, but I do not see the use of QE as any sort of sane resolution… Read more »